Home buyers stormed back into the market at the weekend, pushing prices to record levels in some estates after Chief Executive Leung Chun-ying failed to offer a quick fix for the tight home supply in his inaugural policy address.
"Despite mapping out a detailed five-year plan for land supply, the policy address contained no short-term solution to address tight supply. This prompted home seekers and upgraders to return to the market over the weekend," said Jeffrey Ng Chong-yip, who is senior executive director of Hong Kong Property Services.
In response to the strong demand, sellers were encouraged to raise prices, with the result that some deals drew new record prices, Ng said.
A 1,580-square-foot flat in the Harbourfront Landmark in Hung Hom sold for HK$40.8 million, or HK$25,823 per sq ft of saleable area and HK$18,924 per sq ft of gross floor area, making it the most expensive of similar-sized flats in the block, according to Ricacorp Properties.
Midland Realty said a buyer paid HK$5.4 million, or HK$10,056 per sq ft in saleable area and HK$7,941 in gross floor area, for a 680 sq ft flat at Sceneway Garden in Lam Tin - also a record for the estate.
Maggie Choy, senior sales manager at Midland Realty's Lam Tin branch, said owners had raised their asking prices about 3 per cent after Leung failed to unveil any short-term solutions to the shortage of housing.
"Home seekers have speeded up their buying decisions because their options in the secondary residential market are limited,' she said. "Some were willing to sign up to buy even before viewing flats occupied by tenants."
Data from Ricacorp Properties, which monitors sales in the city's 50 major housing estates, show that deals climbed 19 per cent to a 16-week high of 321 last week, compared with 269 in the previous week. In the primary market, 223 flats were sold over the weekend, up almost 50 per cent from the 151 over the previous weekend.
Alfred Lau, a property analyst at Bocom International, said in response to the resurgence of demand and the absence of new cooling measures, developers were likely to price their new projects 10 to 20 per cent above secondary market prices.
But Patrick Chow, head of research at Ricacorp Properties, doubted that the latest surge in demand would extend beyond the Lunar New Year holidays, a traditional peak season for the property market. "Owners are becoming excessively bullish and are holding back for higher prices as they have seen four or five bidders compete for one flat," he said.
And with prices back on the rise, the government would come under pressure to cool the market down.
Kenneth Chiu, assistant sales manager for Centaline Property Agency's Taikoo Shing branch, said the number of flats for sale in Taikoo Shing had dropped to an historic low of 530. "Sales will slow from now to the Chinese New Year," he predicted.
Two government-subsidised housing projects that closed for applications last week had also locked in some buyers, at least temporarily, Chow added.
One of the projects, Greenview Villa, attracted almost 45,000 applicants for 988 flats, while the revised Home Ownership Scheme drew 30,200 applications for its 5,000 units.
"This large group of applicants will not enter the private housing market until the announcement of the ballot result next month," Chow said.